Stability and Growth Pact

For this month’s Special Report, Prof. Dr. Thomas Straubhaar, professor of Economics at the University of Hamburg, shares his opinion on the current state of affairs in the EU’s economy as well as the future of fiscal integration. He was the Director of the Hamburg Institute of International Economics (HWWI) from 2005 till 2014. In 2005 he joined the IZA Policy fellow network. In 2009 he was awarded the Helmut Schmidt Fellowship of the ZEIT Foundation at the Transatlantic Academy in Washington, DC.

The Stability and Growth Pact was designed to ensure sound budgetary balances and low public debts in the European Union, ultimately achieving fiscal policy coordination. 18 years after its inception, overburdened by an opaque and intricate web of flexibility clauses, the Pact is de facto dead. Could this be the opportunity to rethink European fiscal governance?